If you’re not familiar, the EEI is the last word, the “state of the union,” if you will, gauging the hearts and minds of of global executives and building owners responsible for energy management and investment decisions in commercial and public sector buildings. This year, the EEI surveyed 4,000 respondents in 13 countries on six continents and was conducted in eight languages. That’s a lot of bubbles to fill in completely with a #2 pencil!

‘Extremely’ or ‘Very’: Energy Efficiency Makes the Big Time

What you probably already know: as many as seven in ten executives globally say energy management is extremely important or very important to their organizations. Execs have pursued an average of nine different energy efficiency measures in the past year.

And what’s motivating them? Simply put, the rising cost of energy. We all know energy costs will keep on rising. It’s sort of like gravity – you can pretty much count on it. Up significantly in importance from 2010, however, is government incentives. With over half the states offering some kind of financial incentive for efficiency measures, execs are now listening. It’s sort of like getting cash back at the grocery store on a big ticket item: why not? Third biggest motivator was to enhance the branding of a building.

In fact, interest in certified green buildings doubled from 2010 and for the first time, certification efforts are more prevalent for existing buildings than new ones. Lower on the motivational list: reduction of greenhouse gas emissions, domestic energy security, and other government policies.

Now, the challenges: while the graphic to the left shows that 67% of executives surveyed report that they have allocated capital from their operating budget to energy efficiency in the last year, (yay!) significant market barriers to pursuing further investment (boo).

These barriers come in all colors and flavors, depending on market sector. From the report:

The five key barriers to energy efficiency investments reported in the survey are:

lack of awareness of opportunities for energy savings;

lack of technical expertise to design and complete projects;

lack of certainty that promised savings will be achieved;

inability of projects to meet the organization’s financial payback criteria; and

lack of available capital for investment in projects.

For the contractor serving small to midsize buildings, it is interesting to note that respondents with control over more square footage in larger facilities report having implemented more energy projects than those with smaller facilities. But trickledown is sure to follow.

Four is the Magic Number

According to the EEI Survey, real estate organizations sharing the following four key strategic practices are most likely to get on the energy efficiency bandwagon, and implemented four times as many energy efficiency improvement measures as those that did not:

goals established for reduced energy use or carbon emissions;

energy use data measured and analyzed at least monthly;

added resources dedicated to improving energy efficiency through the hiring or retraining of staff, or the hiring of external service providers; and

And in the second place, BuildingAdvice is like adding a team of expert management, sales, and engineering personnel acting as an extension of an HVAC Contractor’s current team to drive the development and ongoing execution of an energy services business. ‘Nuff said.

It’s getting around that a retrofit can typically cut a building’s energy use so much that the project pays for itself in as little as five years. A new tax arrangement in Miami and Sacramento allows property owners to upgrade their buildings at no upfront cost, typically cutting their energy use and their utility bills by a third.

Lockheed Martin, Barclays Bank and some other big boys, headed up by Ygrene Energy Fund of Santa Rosa, Calif., have formed a consortium that will invest $650 million in such upgrades over the next few years.

The article called waste in older buildings “one of the nation’s biggest energy problems” and cited energy as a sector that could eventually be worth billions.

The meat of the plan is pretty genius: the constortium is kind of like a strip mall serving all of your energy efficiency needs in one stop. Ygrene and its partners gain exclusive rights for five years to offer this type of energy upgrade to businesses in a particular community. Lockheed Martin does the engineering work. Short-term loans come from Barclays Capital to pay for the upgrades. Then, “Contractors will offer a warranty that the utility savings they have promised will actually materialize,” the article states. Insurance underwriter, Energi, of Peabody, Mass., backs up that warranty. It goes on from there.

Best of all, owners pay no upfront cost for energy efficient upgrades. Instead, a surcharge is attached to subsequent property tax bills for five to 20 years. However, as the surcharges are less than the savings, the upgrades pay for themselves. Really. The new approach could garner substantial private capital for many midsize and smaller businesses to get on the energy efficiency bus.

In the past three years, half the states have passed legislation permitting energy retrofits financed by property-tax surcharges, and hundreds of cities and counties are considering such programs. The new financing approach is called Property Assessed Clean Energy, or PACE financing. PACE saw some serious backlash last year when an arm of the federal government that oversees the mortgage market took a hostile stance toward such projects on residential property, on the grounds that they add risk to mortgages. But, the article notes, “So far, it appears that PACE programs for commercial properties pose fewer legal complications.”

Richard Branson by Michael Nagle/Bloomberg News

The consortium was put together by the Carbon War Room, a nonprofit environmental group based in Washington set up by Richard Branson, the British entrepreneur and billionaire, to tackle the world’s climate and energy problems in cost-saving ways.

Git Along, Little Doggie

“Perhaps the most serious risk,” the article notes, “is that fly-by-night contractors will be drawn to the new pot of money, pushing energy retrofits that are too costly or work poorly.

‘Contractors are cowboys,’ said Dennis Hunter, chairman of Ygrene. He promised close scrutiny of the ones selected for the Miami and Sacramento programs.”

“…commercial energy retrofits currently can take a few years to plan and finance. New business models that can deliver the projects more quickly and efficiently are needed to lure more business customers.”

To that The Building Advisor says, what about BuildingAdvice’s low- and no-cost recommendations with less than a year paybacks, in some cases months? What about MacDonald Miller in Bellevue, Wash., who brought down utility costs and the EnergyStar score of the Medical Center of Issaquah up in a matter of months? (You can read about it in the MCAA’s Smart Solutions here.) We’ve got some great case studies to back up our ability to start saving building owners money immediately.

Interesting – and kind of great – that energy efficiency was a breakout of SolarWorld at all, because most people but solar in a whole different category from energy efficiency.

A square foot garden helps us think about efficiency in small spaces.

Fun fact: BuildingAdvice VP of Market Development, Tim Kensok, today reminded us that 99% of all commercial buildings in the U.S. are under 200k square feet. Generally speaking, that means that before automated, broadly-applicable products like BuildingAdvice, only 1% of buildings in America could afford to closely examine their energy usage, based on the cost of labor-intensive energy engineers in comparison to a building’s net operating income by size.

BuildingAdvice serves the small- to midsize market by offering an automated product offering that offers 80% of the value of an energy engineer at 20% of the cost, Kensok told a reporter today.

But getting back to the point. earth2tech also reports that “During the panel discussion at SolarTech, Matt Cheney, CEO of Cleanpath Ventures… said he saw a good fit between real estate companies and energy efficiency services.”

Now there we agree. That’s why we’re revving our engines for a new product offering to soothe the pain points of our biggest customers, who may just now be realizing how their six or 60 buildings under 200k square feet adds up to a whole lot of potential energy savings.

Most lights were switched off on the Tokyo Rainbow Bridge and on the Tokyo tower in the background

Last thought: did you know that Tokyo has doused much of the its outlandish, energy sucking displays in an effort to conserve power post-earthquake? Wrote the AFP march 25, “The huge television screens and illuminated billboards that usually light up one of the world’s busiest pedestrian intersections” in Shibuya, a teen fashion district, have gone dark.

The Building Advisor’s new best friend, Joanna Turpin, wrote a great piece in Contractor Excellence this week on the prime opportunities for commercial contractors who offer cost-decreasing energy efficiency services, “Energy Services Energize Profits.”

Turpin zones in on some key points, like the current level of competition in the market and the need for many contractors to differentiate themselves and secure a greater marketshare. Two flying buttresses for this strategy (medieval architecture reference, anyone?): as energy costs continue to rise, energy management services are quickly trending to become some contractor’s highest profit margin installation products.

No, we’re not talking about a New Age mental technique to attract love and money – we’re talking about The Secret to making energy services compelling to building owners and managers. A hint? It’s in the difference between traditional service agreements and stepping up as your client’s energy efficiency management partner:

“‘With service agreements, the focus is generally on minimizing repair expense, extending the useful life of the equipment, and maintaining the quality and comfort of the indoor air. With energy projects, the secret is financial payback and optimum control of the HVAC systems. Cost justification is more critical since the capital investment for energy solutions is often higher.’”

Randy just said a mouthful. One thing is cost justification – how do you get it? BuildingAdvice provides scientific data collection and analysis to produce the most effective recommendations and reports that show your client how to save more money in the long run, and when that will happen.

Clients are looking for projects that are cost justified, meet their financial criteria for payback and return on investment, and follow a financial model that’s familiar. BuildingAdvice reports fit the bill.

But we digress.

In thinking of yourself as an energy management partner with your client, you’ll not only earn trust, you’ll earn a bigger share of your clients’ load. Turpin nails it on the head:

“Mechanical contractors who offer these comprehensive energy solutions are not only demonstrating their concern for the financial health of their clients, they are demonstrating their willingness to invest in the current and future needs of their clients, which will ultimately benefit their own profit margins.”

And The Building Advisor will leave you with these fun facts on a Friday afternoon:

Energy Star estimates that, on average, about 30 percent of the energy in buildings is used inefficiently or unnecessarily.

The 5 million commercial and industrial buildings in the United States account for nearly 50 percent of all energy consumption nationwide.

At BuildingAdvice we try to spend time in the market whenever possible so we can see firsthand the effects that energy efficiency has on everyday building owners and operators, as well as the HVAC contractors and other service providers who are helping them to achieve this efficiency. Last week I had the benefit of making such a trip, going out on sales calls with HVAC contractors, and here are a few of the lessons that I learned:

Saving money on energy is attainable. In every appointment that I went on the savings opportunities were all over the board. In most cases it was noticeably cold in several of the facilities (they were over-cooling on a warm California day), causing energy and comfort complaints. The great thing was that there were a ton of “low to no cost” fixes that were apparent even before doing an Energy Assessment. In most of these appointments, that was not known to the building operator or owner, and yet savings of 5-30% are available with no to low cost fine tuning of the building.

Energy savings is meaningful. In each appointment the topic of saving money on energy was extremely important to the building owner or manager. Although I know that we at BuildingAdvice have a hand in saving the end customer money, it was nice to experience it in person. In today’s economy every dollar counts and with energy taking up approx. 30% of buildings’ operating costs, that is a lot of money saved.

Energy savings is powerful. Pardon the pun, but energy savings is powerful. It has the power to improve profitability, to save jobs, to allow projects to go forward, to fund new research, the list is endless. Remember that with every dollar saved your company not only has more cash available but you are improving the asset value of the building in the process! This is powerful.

I also began to think a little more about why more building owners and managers are not jumping onto the energy efficiency bandwagon? You can make the changes for little to no cost; the savings go right to the bottom line. You increase the asset value of your building and you help the environment all at once. It seems like a no-brainer to me… How about you?

So you hear about it in the news, online and on our blog. Green… It seems that the word is everywhere these days. The question is, are building owners getting on the bandwagon as well? According to a recent report released by Pike Research, the green movement is only getting bigger. In fact, according to their research, the amount of certified green buildings will increase by 780% in the next 10 years.

Now that is a big number. But how does that affect you if you are a mechanical services contractor?

Let’s do the math. Let’s say you have an average size service business with 500 service contractors. Now, let’s say that just 10 of your customers buildings are currently green certified. If the math holds true then in the next 10 years you would have 78 customers with certified green buildings.

Why is this important?

More and more mechanical service providers are getting into the Energy Game. If your customers are going “green” they will need someone to partner with to make that happen. What are the chances that their “partner” ends up being your competition?

Let’s face it, whether your customers want to go “green” or are just looking to save money, the energy movement is no longer a fad, it is a reality.
If you are not able to provide this service to your clients someone else will.

Energy. It’s what BuildingAdvice is all about: how buildings can most efficiently use this natural resource to operate, and how a focus on energy services can improve the bottom line of the businesses of our contractor channel partners while helping the building owners and managers they serve.

Understanding your service business metrics. What are energy services and how do they fit into a planned maintenance program? What to do in advance of your service renewal date. Meeting with your client prior to next service date anniversary. Qualifying your customers’ interest with automated ENERGY STAR™ benchmarking. Adding energy services to existing service agreements.

Targeting the right accounts and the discovery meeting. How to ensure retrofits continue to drive savings. Monitoring and verification. Selling an energy audit, closing retrofits using the audit report and partnering with your local utility.

If you’re considering adding energy management to your company’s service offerings or are looking to improve an existing energy service offering, start with this educational series on starting an energy management conversation and building valuable client relationships through a focus on energy cost savings. Register for free here.

Curtail over-ventilation – The number one culprit in the fight against energy waste. Lucas Klesch wrote a comprehensive post on overventilation here, soon to be accessible on Sustainable Facility. He goes into detail on the value of a property functioning economizer and damper system.

Adjust lighting schedule – Does your lighting schedule match your tenant schedule? Matching the two more closely allows you to get the most out of the energy usage when you need it.

Eliminate competing HVAC systems – As crazy as it sounds, many buildings run heating and cooling systems simultaneously. What’s even richer is that mechanical service providers often aren’t aware that this is happening. Stop your building from fighting with itself and reap the benefits in your utility bills.

Re-evaluate HVAC when space configuration changes – Have you downsized your staff? Put up a wall or other internal partition in a large office area? If there are unoccupied areas of your property or changes in your space configurations, most likely your HVAC systems aren’t up to par for the changes made. Re-assess the space’s needs by evaluating control points and air distribution locations.

Take weekends off – Unless your office or commercial building is in full swing seven days a week, make sure you’re not running air conditioning when there’s no one there to benefit from it.

CBRE continues to show leadership in the commercial real estate market in sustainability efforts . WIth 50 projects in its U.S. management portfolio having obtained the LEED for Existing Buildings (Leadership in Energy and Environmental Design) certification through the U.S. Green Building Council (USGBC), CBRE is the largest third-party manager in the USGBC’s LEED program. In addition, CBRE currently has engaged an additional 59 projects, representing 100 buildings and 40 million sq. ft., in the certification process, which are expected to be completed by the end of 2010.

LEED certification is just one of the ways that CBRE is helping clients to manage their commercial assets to reduce costs and improve asset performance. Energy efficiency, in particular, is a large part of the effort.

Through a repeatable process of energy benchmarking, assessment, and improvement, commercial building owners can be assured that the performance of their buildings is being constantly improved and the operating costs lowered. LEED may or may not be part of the overall effort. If it is, even better. But, any and every building should at the very least have its energy consumption measured and evaluated.

Here’s an example of yet another type of organization that is working to improve the energy efficiency of an existing building stock. The Downtown Development Authority of Ann Arbor, MI, is in the 2nd year of its Downtown Energy Saving Grant Program. In this program, participating companies receive a free energy audit from a city-approved contractor, worth anywhere from $2,000 to $5,000. The auditor will identify list of improvements that would boost energy efficiency, and after consultation with the DDA, landlords then pick which energy efficiency improvements to make. After the improvements are made, the DDA rebates half of the landlord’s cost, up to $20,000.

Do you know about other programs like this? We’d like to hear about them. And whoever you are in the food chain, whether a contractor who does energy audits or a building owner or manager, you can push for programs like this in your area.

The July 14 Flex Your Power newsletter reveals the results of a study on energy efficiency messaging by Professor Wesely Schultz of California State University San Marcos. According to Schultz, “individuals tend to base their environmental decisions more on what they think is normal, than on what they think is simply ‘the right thing to do.’” In his study, doorhangers were distributed to 1,200 homes, each containing one of five messages. Four of the messages were “traditional ideas such as saving energy saves money, is socially or environmentally responsible, or is easy to do.”

However, the fifth message was quite different. Instead, “the fifth message compared the household’s energy use to average use in the neighborhood.” After several weeks of monitoring electricity use, “researchers found that homes that received the fifth message achieved the greatest reductions in energy use, with high consumers using significantly less electricity after the campaign.”

The lesson is that consumers are highly motivated by their sense of being normal–how they stack up to others. Alone, energy efficiency messaging is not enough…a means to measure and compare is also needed for maximum results. GreenQuest provides both a platform for messaging and comparisons of actual energy use.